UpdateDow, PIC to set up $11bn petchems jv

13 December 2007 17:35[Source: ICIS news]

(Adds quotes for Dow, background and updates throughout)

By Lucy Craymer

LONDON (ICIS news)--An $11bn joint venture created by US’ Dow Chemical andPetrochemical Industries Co will take advantage of the Kuwait company’s access to feedstocks, Dow chairman and CEO Andrew Liveris said on Thursday.

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To form the company, Dow will sell PIC a 50% share in five of its global businesses worth approximately $19bn and PIC will pay the ?xml:namespace>US company $9.5bn.

Access to low-cost feedstocks in the Middle East is necessary for Dow to remain competitive and have a global advantage, Liveris said.

“This will give the new joint venture company the distinct advantage of full integration from feedstocks to derivatives, while meeting growing customer demand in emerging markets,” Dow said.

“This project is the child of a company keen to grow,” Liveris said. “We will find projects to invest in.”

The deal will position Kuwait as a "global player" within petrochemicals, while building on Dow's management strengths around the world, said Robert Bauman, vice-president for polymers at the Nexant consultancy in Houston, Texas.

"It conforms to Dow's strategy and will make them more competitive by allowing them to capitalise on areas where they are competitive," Bauman said. "All assets that are not performing will be shut down."

The two companies have been working together for 10 years, said Liveris. PIC already has two joint ventures with Dow - Equate Petrochemical and MEGlobal.

“They know us - they trust us - we have delivered,” he said in a television interview after the news conference.

The JV is a way for Kuwait to achieve more “global credibility”, he added.

Dow’s shares were up 7.47% to $44.87 in early morning trading on the New York Stock Exchange.